Halifax woos new customers with £100 upfront for current account switchers until mid-February

Taxpayer-backed bank Halifax will pay £100 straight away to anyone switching to its current accounts over next month.

The bank hopes to woo new customers with what it calls a 'major switching initiative'.

It follows Co-op's £200 deal last October, now ended, and Santander's on-going up to £300 offer in a growing trend of banks offering cash freebies to switchers.

Major push: Halifax wants to add to its current account customer base with a £100 offer designed to attract a wave of switchers

A large current account base is seen as essential for a High Street bank - it provides the perfect avenue through which to peddle profitable loan and savings deals.

Halifax, part of 41 per cent taxpayer-owned Lloyds Banking Group, says it will pay the £100 on the day a customer 'starts the switching process'.

The parent company is set to lose 632 branches, worth 4.6 per cent of the current account market, to The Co-operative Bank as part of a European Union directive. It will hope Halifax's new drive can claw back a little market share.

The offer is expected to be available until 19 February, but Halifax reserves the right to withdraw it sooner.

In addition to the £100, Halifax customers can earn £5 a month if they pay in £1,000 to its popular Reward Current Account, which is fee-free as long as the balance doesn't drop into the red.

The bank admits the switching process takes 'about a month', but insists a dedicated team removes hassle from the process.

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Halifax switchers get their £100 the
same day if they apply in-branch. They can access this via internet
banking immediately. The £100 appears in the account 'within days' for
telephone and internet applications.

All regular payments, including direct debits and standing orders, must be transferred from an existing bank account via its service.

New customers can choose one of three accounts: the Reward Current Account, Ultimate Reward Current Account - which cost £15 for a package of insurance deals and other benefits (£10 after the £5 monthly reward) - or its simplest Current Account offering.

Existing current account customers are excluded from the deal. However, anyone with a Halifax or Bank of Scotland account in their sole name can open a new joint Halifax account and qualify for a shared £100 freebie. Equally someone with a joint account can switch to a new solo account and qualify.

Applications must be received in branch, online or by telephone between by midnight on 19 February.

How does it match up with other deals?

Santander is known for its switching deals. It's currently offering up to £300 to customer if they take the plunge. Anyone completely new to Santander gets £100, those with a Santander mortgage get £200, and anyone with a mortgage and £10,000 in savings at the Spanish bank gets £300 [read more details].

First Direct also offers £100 to switchers who pay in £1,500 a month. But in a unique twist it also pays them £100 if they're unhappy and decide to leave. The internet and telephone offshoot of HBSC has an excellent record on customer service, consistently topping polls by Which? and JD Power, so is rarely forced to pay out a second time [read more details].

Other decent current account offers include Nationwide's free European travel insurance[read more details] and HSBC's 6 per cent interest for a year – part of its 'January Sales'[read more details].

Customers with an agreed overdraft at The Co-operative Bank, which has just snapped up 632 Lloyds branches in auction, have had all fees waived until April [read more details].

Industry insiders say banks have come under 'intense pressure' to sell more products since the 2008 crisis hit. The battle to increase current account market share is part of this because it provides a long list of potential buyers.

John Everhard, director of bank technology firm Pegasystems, says big banks now want to hit the 'three or four' products per customer mark, rather than the one or two typical today.